Friday, October 14, 2005

National Security Requires Corporate Welfare?

As corporate profits have zoomed in recent years and CEO salaries skyrocketed, more jobs have been exported to cheap foreign labor markets. Nonetheless, corporations have enjoyed bigger tax breaks, thus contributing a dwindling percentage of federal and state tax revenues. One might think these giveaways would be incentives enough to energize corporations toward innovation and development, but these same corporations have, instead, reduced their spending for R&D.

The gathering storm, it seems, will come in the form of foreign competition for the control of world markets. Here is quote from the report that succinctly boils down the problem:

Civilization is on the brink of a new industrial order. The big winners in the increasingly fierce global scramble for supremacy will not be those who simply make commodities faster and cheaper than the competition. They will be those who develop talent, techniques and tools so advanced that there is no competition (p. 1-3).

The reason we don't have that talent? Well, of course--it is the fault of the schools. Here are some of the indicators of the problem from the report summary:

· For the cost of one chemist or one engineer in the United States, a company can hire about five chemists in China or 11 engineers in India.

· Last year chemical companies shuttered 70 facilities in the United States and have tagged 40 more for closure. Of 120 chemical plants being built around the world with price tags of $1 billion or more, one is in the United States and 50 are in China.

· Last year more than 600,000 engineers graduated from institutions of higher education in China. In India, the figure was 350,000. In America, it was about 70,000.

· In 2001 U.S. industry spent more on tort litigation than on research and development.

Without a major push to strengthen the foundations of America's competitiveness, the United States could soon lose its privileged position. The ultimate goal is to create new, high-quality jobs for all citizens by developing new industries that stem from the ideas of exceptional scientists and engineers.

The solution? More exceptional science majors and engineers. Lots of them. The report proposes scholarships to put 25,000 more science and engineering majors into the pipeline each year.

Do we need that many more engineers and scientists, especially when corporations prefer to hire the cheap ones from abroad? Here is what the U. S. Government's Occupational Outlook Handbook 2004-05 says about the job outlook for engineers:

Overall engineering employment is expected to grow more slowly than the average for all occupations over the 2002-12 period. Engineers tend to be concentrated in slow-growing manufacturing industries, a factor which tends to hold down their employment growth. Also, many employers are increasing their use of engineering services performed in other countries. Despite this, overall job opportunities in engineering are expected to be good because the number of engineering graduates should be in rough balance with the number of job openings over this period. Expected changes in employment and, thus, job opportunities vary by specialty. Projections range from a decline in employment of mining and geological engineers, petroleum engineers, and nuclear engineers to much faster than average growth among environmental engineers.

And here is what the OOH says about the future prospects for the biological scientists:

Despite projected as fast as the average job growth for biological scientists over the 2002-12 period, doctoral degree holders can expect to face competition for basic research positions. The Federal Government funds much basic research and development, including many areas of medical research that relate to biological science. Recent budget increases at the National Institutes of Health have led to large increases in Federal basic research and development expenditures, with research grants growing both in number and in dollar amount. At the same time, the number of newly trained scientists has continued to increase at least as fast as available research funds, so both new and established scientists have experienced difficulty winning and renewing research grants. Currently, about 1 in 3 grant proposals are approved for long-term research projects. If the number of advanced degrees awarded continues to grow, as seems likely based on enrollment trends, this competitive situation will persist. Additionally, applied research positions in private industry may become more difficult to obtain if increasing numbers of scientists seek jobs in private industry because of the competitive job market for independent research positions in universities and for college and university faculty.

What to do, what to do about this non-problem!? Could it be the patriotic solution to create an oversupply of engineers and scientists so that salaries can be driven down to compete with the foreign labor markets, thus creating our own homegrown Third-World labor force?

Here is a summary of the recommendation by the Committee. Notice that all of them refer to government interventions ($$), rather than corporate responsibilities. Policymakers should give us more, and we will invest less. Count the times you read "policymakers should":

· Among the recommended implementation steps is the creation of a merit-based scholarship program to attract 10,000 exceptional students to math and science teaching careers each year. Four-year scholarships, worth up to $20,000 annually, should be designed to help some of the nation's top students obtain bachelor's degrees in physical or life sciences, engineering, or mathematics -- with concurrent certification as K-12 math and science teachers. After graduation, they would be required to work for at least five years in public schools. Participants who teach in disadvantaged inner-city or rural areas would receive a $10,000 annual bonus. Each of the 10,000 teachers would serve about 1,000 students over the course of a teaching career, having an impact on 10 million minds, the report says.

Sowing the Seeds

Sustain and strengthen the nation's commitment to long-term basic research.

· Policy-makers should increase the national investment in basic research by 10 percent each year over the next seven years. Special attention should be paid to the physical sciences, engineering, mathematics, and information sciences, and to basic research funding for the U.S. Department of Defense, the report says.

· Policy-makers also should establish within the U.S. Department of Energy an organization called the Advanced Research Project Agency -- Energy (ARPA-E) that reports to the undersecretary for science and sponsors "out-of-the-box" energy research to meet the nation's long-term energy challenges.

· Authorities should make 200 new research grants annually -- worth $500,000 each, payable over five years -- to the nation's most outstanding early-career researchers.

Best and Brightest

Develop, recruit, and retain top students, scientists, and engineers from both the United States and abroad. The United States should be considered the most attractive setting in the world to study and conduct research, the report says.

· Each year, policy-makers should provide 25,000 new, competitive four-year undergraduate scholarships and 5,000 new graduate fellowships to U.S. citizens enrolled in physical science, life science, engineering, and mathematics programs at U.S. colleges and universities.

· Policy-makers should provide a one-year automatic visa extension that allows international students to remain in the United States to seek employment if they have received doctorates or the equivalent in science, technology, engineering, mathematics, or other fields of national need from qualified U.S. institutions. If these students then receive job offers from employers that are based in the United States and pass a security screening test, they should automatically get work permits and expedited residence status. If they cannot obtain employment within one year, their visas should expire.

Incentives for Innovation

Ensure that the United States is the premier place in the world for innovation. This can be accomplished by actions such as modernizing the U.S. patent system, realigning tax policies to encourage innovation, and ensuring affordable broadband Internet access, the report says.

· Policy-makers should provide tax incentives for innovation that is based in the United States. The Council of Economic Advisers and the Congressional Budget Office should conduct a comprehensive analysis to examine how the United States compares with other nations as a location for innovation and related activities, with the goal of ensuring that the nation is one of the most attractive places in the world for long-term investment in such efforts.

· The Research and Experimentation Tax Credit is currently for companies that increase their R&D spending above a predetermined level. To encourage private investment in innovation, this credit, which is scheduled to expire in December, should be made permanent. And Congress and the administration should increase the allowable credit from 20 percent to 40 percent of qualifying R&D investments.

Hiding behind the facade of the National Academy of Science cannot disguise the rationale and intent of this leading group of corporationists (sometimes referred to as corporate socialists--and not to confused with national socialists, whose ideology was bounded by nationalism). Only the New York Times appears to be fooled (it is hard to tell these days when they are pretending).